Meet Starbucks' Big Changes to Its Rewards Program

Starbucks Corp. (NASDAQ: SBUX) shares made a slight gain on Tuesday after the coffee chain announced that there would be big changes to its rewards program.

Beginning April 16, all members will be able to earn and redeem Stars for Rewards immediately after joining the program, bringing instant value to its growing fan base. Members will continue to earn two Stars for every $1 spent when using a registered Starbucks Card for eligible purchases at Starbucks stores.

The Starbucks Rewards program was introduced in 2009 and continues to grow in popularity. Membership has grown over 25% in the past two years alone, climbing to 16 million active members as of December 2018, a 14% increase over the prior year.

In the same time frame, Starbucks Rewards transactions accounted for 40% of tender in U.S. company-operated stores.

The new tiered rewards structure will replace the current single option at participating Starbucks locations, offering customers more ways to use their Stars toward free items:

  • 25 Stars: Extra Espresso Shot, Dairy Substitute or Additional Flavor
  • 50 Stars: Brewed Hot Coffee, Hot Tea or select Bakery Items
  • 150 Stars: Handcrafted Drink, Hot Breakfast or Yogurt Parfaits
  • 200 Stars: Lunch Sandwich, Protein Box or Salad2
  • 400 Stars: Select Merchandise or Packaged Coffee

Matthew Ryan, Starbucks chief marketing officer, commented:

Since introducing Starbucks Rewards ten years ago, we’ve experienced tremendous growth and continued to evolve the program to meet the changing needs and purchase patterns of our customers. These new updates put choice in the hands of our customers and a personal touch they can only get from Starbucks.

Shares of Starbucks were last seen up less than 1% at $71.25, in a 52-week range of $47.37 to $72.18. The consensus price target of $69.40.